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05-04-2011
Sale in Transit
In simple words, Sale in Transit means, Sales made by the Buyer (subsequent seller), without taking the physical delivery of the Goods bought during the movement of goods from one state to another i.e. goods resold by transferring the documents of title of the goods, normally called G.R. / R.R. / L.R. to the another party (Subsequent Buyer).
As defined in Act
As per Central Sales Tax Act,1956 Section 6(2) Notwithstanding anything contained in sub-section (1) or sub-section (1A), where a sale of any goods in the course of inter state trade or commerce has either occasioned the movement of such goods from one state to another or has been effected by a transfer of documents of title to such goods during their movement from one state to another, any subsequent sale during such movement effected by a transfer of documents of title to such goods to a registered dealer, if the goods are of the description referred to in sub-section(3) of section 8, shall be exempt from tax under this Act
Example 1
A State Haryana Sale to B
FORM C
FORM E-l
It is worthy to understand that the transactions between B and C will remain inter-state sale, even both of them are registered in the same state due to the fact that goods are transferred during the movement from one State to another
Example 2
A State Haryana Sale to B
FORM C B FORM E-l
C State Delhi State Gujarat FORM C Purchase from A Purchase from B and sell to C and sell to D FORM E-lI
In this case the subsequent seller also transfer the goods in transit, every subsequent buyer will issue form C to his preceding seller
Documentation
AVANA Purchase orders (PO) on Vendor to mention: Billing address: AVANA , Delhi. Delivery address: AVANA c/o Customer <address as mentioned on Customer PO Rate at which sales tax shall be charged by the Vendor against issuance of Form C Instructions that the Vendor shall furnish Form E-I to AVANA